Wiley Reports Second Quarter Fiscal 2021 Results

John Wiley & Sons, Inc. (NYSE:JWA)(NYSE:JWB), a global leader in research and education, today announced results for the second quarter ended October 31, 2020.

SECOND QUARTER SUMMARY

• GAAP Results: Revenue of $491 million (+5%) and EPS of $1.22 (+54%)
• Adjusted Results (at constant currency): Revenue +4% to $491 million, EBITDA +7% to $120 million, and EPS +12% to $1.00
• Research Publishing & Platforms (at constant currency): Revenue +5% and Adjusted EBITDA +14% on strong double-digit growth in Open Access
• Academic & Professional Learning: Revenue for Education Publishing marginally ahead of prior year as accelerated growth in digital content and courseware more than offset decline in print books
• Education Services: Second Quarter and First Half Adjusted EBITDA margin of 21% and 17%, trending ahead of FY22 target of 15%

MANAGEMENT COMMENTARY

“Wiley’s consistent strategies in open research and online education continued to deliver strong returns with record research output and content consumption, robust online enrollment growth, and broad digital courseware adoption,” said Brian Napack, President and CEO. “The pandemic is accelerating important trends underlying our core strategies, including a global increase in the demand to publish and access high-quality research and a decisive shift to online learning and digital curriculums.”

SECOND QUARTER PERFORMANCE

GAAP Measures

Unaudited ($millions except for EPS)

Q2 2021

Q2 2020

Change

 

Revenue

$491.0

$466.2

5%

Diluted EPS

$1.22

$0.79

54%

Non-GAAP Measures

Q2 2021

Q2 2020

Change Constant Currency

Revenue

$491.0

$466.2

4%

Adjusted EBITDA

$120.3

$110.0

7%

Adjusted EPS

$1.00

$0.85

12%

Excluding acquisitions and currency impact, revenue was flat for the quarter. Wiley recorded a favorable FX variance of $8 million in revenue, $0.05 in Adjusted EPS, and $2 million in Adjusted EBITDA.

Revenue

• Research Publishing & Platforms rose 7% as reported and 5% at constant currency with strong growth in open access and content platforms driving results.
• Academic & Professional Learning declined 4% as reported and 5% at constant currency mainly due to COVID-19 impact on Professional Learning (-11% reported, -13% constant currency), particularly trade books and in-person corporate training. Within Education Publishing (+1%, 0% constant currency), digital content and courseware growth accelerated, more than offsetting the decline in print textbooks, while test prep continued its sharp decline due to COVID-related exam cancellations.
• Education Services increased 28% as reported and 27% at constant currency, driven by the three-month inorganic contribution from mthree (+$13 million) and organic constant currency growth of 6% in Online Program Management (OPM) services.

Adjusted EBITDA

• Research Publishing & Platforms grew 14% at constant currency, reflecting revenue growth, operational efficiencies, and COVID-related expense savings.
• Academic & Professional Learning declined 10% at constant currency, reflecting revenue performance partly offset by business optimization gains and COVID-related expense savings.
• Education Services rose 94% at constant currency from $8 million to $15 million, driven by revenue growth and business optimization initiatives, notably sustained improvement in student acquisition costs. Adjusted EBITDA margin for the quarter was 21%, up from 14% in the prior year.
• Corporate Expenses rose 10% to $41 million mainly due to the timing of annual incentive costs.

EPS

• GAAP EPS of $1.22 compared to $0.79 in the prior year period and primarily reflected higher Operating Income, lower restructuring charges and interest expense, and a $0.25 discrete tax benefit. In connection with the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), Wiley elected to carry back its fiscal year 2020 U.S. loss for tax purposes to its fiscal year 2015, resulting in a $14 million GAAP tax benefit this quarter.
• Adjusted EPS of $1.00 compared to $0.85 in the prior year and was driven by improved Adjusted Operating Income. The $0.25 discrete tax benefit related to the CARES Act was excluded from Adjusted EPS.

Balance Sheet and Liquidity

• Net debt-to-EBITDA ratio (trailing twelve months) at quarter-end was 1.9 as compared to 1.8 at the end of the year-ago period.
• Available liquidity was approximately $740 million at quarter-end, including $86 million of cash on hand and $655 million of undrawn credit capacity.

Cash Flow (Six Months)

• Net Cash Used in Operating Activities was $77 million compared to $100 million in the prior year period, primarily driven by improved earnings, partly offset by unfavorable timing of changes in working capital. Note, the Company’s use of cash in the first half of the fiscal year is driven by the timing of collections for annual journal subscriptions, which is concentrated in the third and fourth fiscal quarters.
• Free Cash Flow less Product Development Spending was a use of $124 million compared to a use of $156 million in the prior year, primarily reflecting the improvement in Net Cash Used in Operating Activities.

FISCAL YEAR 2021 OUTLOOK

Based on performance through the six months and leading indicators for the remainder of the year, Wiley is initiating annual guidance for fiscal year 2021. For Revenue, the Company anticipates low-single digit growth overall, which includes low-single digit growth in Research, a mid-single digit decline in Academic & Professional Learning, and double-digit growth in Education Services (mid-single digit growth on an organic basis). Projected performance ranges for consolidated Revenue, Adjusted EBITDA, Adjusted EPS and Free Cash Flow are as follows:

METRIC (in millions, except EPS)

FY20

FY21 OUTLOOK*

Revenue

$1,831

$1,865 - $1,885

Adjusted EBITDA

$356

$380 - $395

Adjusted EPS

$2.40

$2.50 - $2.70

Free Cash Flow

$173

$175 - $200

*Outlook reflects actual currency for results through Q2 and assumes current FX rates prevail for remainder of year.

EARNINGS CONFERENCE CALL

Scheduled for today, December 8 at 10:00 a.m. (ET). Access the webcast on Wiley.com, at https://www.wiley.com/en-us/investors or directly at https://edge.media-server.com/mmc/p/xdo3rqb2. U.S. callers, please dial [phone] and enter the participant code 6272694#. International callers, please dial [phone] and enter the participant code 6272694#.

ABOUT WILEY

Wiley drives the world forward with research and education. Through publishing, platforms and services, we help researchers, professionals, students, universities, and corporations to achieve their goals in an ever-changing world. And for more than 200 years, we have delivered consistent performance to all our stakeholders. The Company's website can be accessed at www.wiley.com.

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “Adjusted Revenue,” “Adjusted Operating Income,” “Adjusted EBITDA,” “Adjusted CTP,” “Free Cash Flow less Product Development Spending,” “organic revenue,” and results on a Constant Currency basis to assess underlying business performance and trends. Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the Company’s ability to realize operating savings over time and in fiscal year 2021 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

Category: Earnings Releases

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)(2)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

October 31,

October 31,

2020

 

2019

 

2020

 

2019

Revenue, net

$ 491,011

$ 466,205

$ 922,337

$ 889,735

Costs and expenses:










Cost of sales

154,853

143,413

299,662

286,509

Operating and administrative expenses

247,167

240,380

484,536

490,550

Restructuring and related charges

1,920

4,001

4,138

14,736

Amortization of intangibles

17,166

15,020

34,057

29,990

Total Costs and Expenses

421,106

402,814

822,393

821,785

Operating Income

69,905

63,391

99,944

67,950

As a % of revenue

14.2%

13.6%

10.8%

7.6%

 


Interest expense

(4,461)

(6,787)

(9,075)

(12,864)

Foreign exchange transaction losses

(697)

(2,668)

(779)

(16)

Other income

3,766

2,537

8,157

5,370

Income Before Taxes

68,513

56,473

98,247

60,440

 


Provision for income taxes

81

11,783

13,481

12,126

Effective tax rate

0.1%

20.9%

13.7%

20.1%

Net Income

$ 68,432

$ 44,690

$ 84,766

$ 48,314

As a % of revenue

13.9%

9.6%

9.2%

5.4%

Weighed Average Number of Common Shares Outstanding

Basic

56,005

56,326

55,959

56,431

Diluted

56,165

56,664

56,182

56,791

Earnings Per Share

Basic

$ 1.22

$ 0.79

$ 1.51

$ 0.86

Diluted

$ 1.22

$ 0.79

$ 1.51

$ 0.85

Notes:

(1) The supplementary information included in this press release for the three and six months ended October 31, 2020 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.


(2) All amounts are approximate due to rounding.






 

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

RECONCILIATION OF GAAP EPS to NON-GAAP ADJUSTED EPS - DILUTED

(unaudited)

Three Months Ended

Six Months Ended

October 31,

October 31,

2020

 

2019

 

2020

 

2019

GAAP Earnings Per Share - Diluted

$ 1.22

$ 0.79

$ 1.51

$ 0.85

Adjustments:











Restructuring and related charges (A)

0.02

0.06

0.05

0.20

Foreign exchange losses (gains) on intercompany transactions (A)

0.01

-

(0.02)

0.01

Impact of increase in U.K. statutory rate on deferred tax balances (B)

-

-

0.12

-

Impact of U.S. CARES Act (C)

(0.25)

-

(0.25)

-

Non-GAAP Adjusted Earnings Per Share - Diluted

$ 1.00

$ 0.85

$ 1.41

$ 1.06

Notes:

(A)
The table below shows the net of tax impact of our adjustments to GAAP Earnings Per Share noted above.

Three Months Ended

Six Months Ended

October 31,

October 31,

(amounts in millions)

2020

 

2019

 

2020

 

2019

Net of tax, charges related to the Business Optimization Program

$ 1.4

$ 2.8

$ 2.9

$ 11.1

Net of tax, (credits) charges related to the Restructuring and Reinvestment Program

$ (0.2)

$ 0.3

$ (0.2)

$ 0.2

Net of tax, foreign exchange transaction losses (gains)

$ 0.2

$ 0.5

$ (0.8)

$ 0.7

 


(B)
During the first quarter of fiscal 2021, the U.K. officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a $6.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable U.K. net deferred tax liabilities.


(C)
In connection with the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and certain regulations issued in late July 2020, the Company elected to carry back its fiscal year 2020 loss for tax purposes ("NOL") to its fiscal year 2015 and claimed a $20.7 million refund. The NOL carryback to a year when our corporate tax rate was 35%, including certain related benefits, resulted in a $14 million tax benefit. We expect to receive the refund by the end of fiscal 2021.



(1) See Explanation of Usage of Non-GAAP performance measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three and six months ended October 31, 2020 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.






 

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

RECONCILIATION OF GAAP NET INCOME to NON-GAAP EBITDA AND ADJUSTED EBITDA

(unaudited)

Three Months Ended

Six Months Ended

October 31,

October 31,

2020

 

2019

 

2020

 

2019

Net Income

$ 68,432

$ 44,690

$ 84,766

$ 48,314

Interest expense

4,461

6,787

9,075

12,864

Provision for income taxes

81

11,783

13,481

12,126

Depreciation and amortization

48,430

42,638

97,937

84,857

Non-GAAP EBITDA

121,404

105,898

205,259

158,161

Restructuring and related charges

1,920

4,001

4,138

14,736

Foreign exchange transaction losses

697

2,668

779

16

Other income

(3,766)

(2,537)

(8,157)

(5,370)

Non-GAAP Adjusted EBITDA

$ 120,255

$ 110,030

$ 202,019

$ 167,543

Adjusted EBITDA Margin 

24.5%

23.6%

21.9%

18.8%

Notes:

(1) See Explanation of Usage of Non-GAAP performance measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three and six months ended October 31, 2020 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.






 

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

SEGMENT RESULTS

(in thousands)

(unaudited)

% Change

Three Months Ended October 31,

Favorable (Unfavorable)

2020

2019

Reported

Constant Currency

Research Publishing & Platforms:

Revenue, net

Research Publishing

$ 240,691

$ 225,085

7%

5%

Research Platforms

10,643

9,624

11%

11%

Total Revenue, net

$ 251,334

$ 234,709

7%

5%

Contribution to Profit

$ 74,088

$ 63,291

17%

15%

Adjustments:









Restructuring (credits) charges

(238)

726

Non-GAAP Adjusted Contribution to Profit

$ 73,850

$ 64,017

15%

14%

Depreciation and amortization

19,765

17,037

Non-GAAP Adjusted EBITDA

$ 93,615

$ 81,054

15%

14%

Adjusted EBITDA margin

37.2%

34.5%

Academic & Professional Learning:

Revenue, net

Education Publishing

$ 103,105

$ 101,741

1%

0%

Professional Learning

67,485

75,984

-11%

-13%

Total Revenue, net

$ 170,590

$ 177,725

-4%

-5%

Contribution to Profit

$ 29,878

$ 35,050

-15%

-17%

Adjustments:









Restructuring charges

1,541

800

Non-GAAP Adjusted Contribution to Profit

$ 31,419

$ 35,850

-12%

-15%

Depreciation and amortization

17,720

17,349

Non-GAAP Adjusted EBITDA

$ 49,139

$ 53,199

-8%

-10%

Adjusted EBITDA margin

28.8%

29.9%

Education Services:

Revenue, net

Education Services OPM (2)

$ 56,261

$ 52,781

7%

6%

mthree (2)

12,826

990

#
#

Total Revenue, net

$ 69,087

$ 53,771

28%

27%

Contribution to Profit

$ 7,425

$ 2,583

#

#

Adjustments:









Restructuring charges (credits)

84

(475)

Non-GAAP Adjusted Contribution to Profit

$ 7,509

$ 2,108

#

#

Depreciation and amortization

7,210

5,522

Non-GAAP Adjusted EBITDA

$ 14,719

$ 7,630

93%

94%

Adjusted EBITDA margin

21.3%

14.2%

Corporate Expenses:

$ (41,486)

$ (37,533)

-11%

-10%

Adjustments:









Restructuring charges

533

2,950

Non-GAAP Adjusted Corporate Expenses

$ (40,953)

$ (34,583)

-18%

-18%

Depreciation and amortization

3,735

2,730

Non-GAAP Adjusted EBITDA

$ (37,218)

$ (31,853)

-17%

-16%

Consolidated Results:

Revenue, net

$ 491,011

$ 466,205

5%

4%

Operating Income

$ 69,905

$ 63,391

10%

8%

Adjustments:









Restructuring charges

1,920

4,001

Non-GAAP Adjusted Operating Income

$ 71,825

$ 67,392

7%

4%

Depreciation and amortization

48,430

42,638

Non-GAAP Adjusted EBITDA

$ 120,255

$ 110,030

9%

7%

Adjusted EBITDA margin

24.5%

23.6%

(1) The supplementary information included in this press release for the three and six months ended October 31, 2020 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.


(2) In May 2020, we moved the IT bootcamp business acquired as part of The Learning House acquisition from Education Services OPM to mthree. As a result, the prior period revenue related to the IT bootcamp business has been included in mthree. There were no changes to our total Education Services or our consolidated financial results. The inorganic revenue from mthree in the three and six months ended October 31, 2020 was $12.5 and $24.9 million, respectively.











 


#
Variance greater than 100%

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

SEGMENT RESULTS

(in thousands)

(unaudited)

% Change

Six Months Ended October 31,

Favorable (Unfavorable)

2020

2019

Reported

Constant Currency

Research Publishing & Platforms:

Revenue, net

Research Publishing

$ 471,155

$ 445,012

6%

5%

Research Platforms

20,989

19,072

10%

10%

Total Revenue, net

$ 492,144

$ 464,084

6%

5%

Contribution to Profit

$ 143,906

$ 118,937

21%

20%

Adjustments:









Restructuring (credits) charges

(435)

3,346

Non-GAAP Adjusted Contribution to Profit

$ 143,471

$ 122,283

17%

16%

Depreciation and amortization

39,466

34,190

Non-GAAP Adjusted EBITDA

$ 182,937

$ 156,473

17%

16%

Adjusted EBITDA margin

37.2%

33.7%

Academic & Professional Learning:

Revenue, net

Education Publishing

$ 167,189

$ 167,264

0%

0%

Professional Learning

130,314

155,319

-16%

-17%

Total Revenue, net

$ 297,503

$ 322,583

-8%

-8%

Contribution to Profit

$ 29,498

$ 39,961

-26%

-28%

Adjustments:









Restructuring charges

1,574

3,605

Non-GAAP Adjusted Contribution to Profit

$ 31,072

$ 43,566

-29%

-30%

Depreciation and amortization

36,524

33,873

Non-GAAP Adjusted EBITDA

$ 67,596

$ 77,439

-13%

-14%

Adjusted EBITDA margin

22.7%

24.0%

Education Services:

Revenue, net

Education Services OPM(2)

$ 106,523

$ 100,937

6%

6%

mthree (2)

26,167

2,131

#
#

Total Revenue, net

$ 132,690

$ 103,068

29%

28%

Contribution to Profit

$ 7,983

$ (4,616)

#

#

Adjustments:









Restructuring charges

223

1,614

Non-GAAP Adjusted Contribution to Profit

$ 8,206

$ (3,002)

#

#

Depreciation and amortization

14,489

11,020

Non-GAAP Adjusted EBITDA

$ 22,695

$ 8,018

#

#

Adjusted EBITDA margin

17.1%

7.8%

Corporate Expenses:

$ (81,443)

$ (86,332)

6%

6%

Adjustments:









Restructuring charges

2,776

6,171

Non-GAAP Adjusted Corporate Expenses

$ (78,667)

$ (80,161)

2%

2%

Depreciation and amortization

7,458

5,774

Non-GAAP Adjusted EBITDA

$ (71,209)

$ (74,387)

4%

4%

Consolidated Results:

Revenue, net

$ 922,337

$ 889,735

4%

3%

Operating Income

$ 99,944

$ 67,950

47%

44%

Adjustments:









Restructuring charges

4,138

14,736

Non-GAAP Adjusted Operating Income

$ 104,082

$ 82,686

26%

24%

Depreciation and amortization

97,937

84,857

Non-GAAP Adjusted EBITDA

$ 202,019

$ 167,543

21%

19%

Adjusted EBITDA margin

21.9%

18.8%

 


# Variance greater than 100%

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)

(unaudited)

October 31,

April 30,

2020

2020

Assets:

Current Assets

Cash and cash equivalents

$ 86,063

$ 202,464

Accounts receivable, net 

273,264

309,384

Inventories, net

42,169

43,614

Prepaid expenses and other current assets

75,801

59,465

Total Current Assets

477,297

614,927

 


Product Development Assets, net

48,944

53,643

Royalty Advances, net

18,276

36,710

Technology, Property and Equipment, net

290,071

298,005

Intangible Assets, net

819,834

807,405

Goodwill

1,126,904

1,116,790

Operating Lease Right-of-Use Assets

137,095

142,716

Other Non-Current Assets

101,984

98,598

Total Assets

$ 3,020,405

$ 3,168,794

Liabilities and Shareholders' Equity:

Current Liabilities

Accounts payable

$ 54,911

$ 93,691

Accrued royalties

94,390

87,408

Short-term portion of long-term debt

12,500

9,375

Contract liabilities

285,176

520,214

Accrued employment costs

88,761

108,448

Accrued income taxes

1,901

13,728

Short-term portion of operating lease liabilities

20,071

21,810

Other accrued liabilities

77,026

72,595

Total Current Liabilities

634,736

927,269

Long-Term Debt

825,243

765,650

Accrued Pension Liability

173,084

187,969

Deferred Income Tax Liabilities

131,026

119,127

Operating Lease Liabilities

153,355

159,782

Other Long-Term Liabilities

82,748

75,373

Total Liabilities

2,000,192

2,235,170

Shareholders' Equity

1,020,213

933,624

Total Liabilities and Shareholders' Equity

$ 3,020,405

$ 3,168,794

(1) The supplementary information included in this press release for October 31, 2020 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.






 

JOHN WILEY & SONS, INC.

SUPPLEMENTARY INFORMATION (1)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

(unaudited)

Six Months Ended

October 31,

2020

2019

Operating Activities:

Net income

$ 84,766

$ 48,314

Amortization of intangibles

34,057

29,990

Amortization of product development assets

17,448

17,616

Depreciation and amortization of technology, property, and equipment

46,432

37,251

Other non-cash charges and credits

72,521

59,302

Net change in operating assets and liabilities

(331,846)

(291,994)

Net Cash Used In Operating Activities

(76,622)

(99,521)

Investing Activities:

Additions to technology, property, and equipment

(36,430)

(44,531)

Product development spending

(10,999)

(11,686)

Businesses acquired in purchase transactions, net of cash acquired

(229)

(74,169)

Acquisitions of publication rights and other

(14,021)

(4,045)

Net Cash Used in Investing Activities

(61,679)

(134,431)

Financing Activities:

Net debt borrowings

59,590

317,471

Cash dividends

(38,480)

(38,486)

Purchase of treasury shares

-

(25,000)

Other

(2,511)

(4,718)

Net Cash Provided By Financing Activities

18,599

249,267

Effects of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

3,301

(461)

Change in Cash, Cash Equivalents and Restricted Cash for Period

(116,401)

14,854

Cash, Cash Equivalents and Restricted Cash - Beginning

203,047

93,548

Cash, Cash Equivalents and Restricted Cash - Ending

$ 86,646

$ 108,402

CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING

Six Months Ended

October 31,

2020

2019

Net Cash Used In Operating Activities

$ (76,622)

$ (99,521)

Less: additions to technology, property, and equipment

(36,430)

(44,531)

Less: product development spending

(10,999)

(11,686)

Free Cash Flow less Product Development Spending

$ (124,051)

$ (155,738)

 


See Explanation of Usage of Non-GAAP Measures included in this supplemental information.


(1) The supplementary information included in this press release for the six months ended October 31, 2020 is preliminary and subject to change priorto the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.

JOHN WILEY & SONS, INC. Explanation of Usage of NON-GAAP Performance Measures

In this earnings release and supplemental information, management may present the following non-GAAP performance measures:

• Adjusted Earnings Per Share ("Adjusted EPS");
• Free Cash Flow less Product Development Spending;
• Adjusted Revenue;
• Adjusted Operating Income and margin;
• Adjusted Contribution to Profit and margin;
• EBITDA, Adjusted EBITDA and margin;
• Organic revenue; and
• Results on a constant currency basis.

Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial position as well for internal reporting and forecasting purposes, when publicly providing its outlook, to evaluate the Company's performance and calculate incentive compensation. Non-GAAP performance measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial results under U.S. GAAP.

The Company presents these non-GAAP performance measures in addition to U.S. GAAP financial results because it believes that these non-GAAP performance measures provide useful information to investors and financial analysts for operational trends and comparisons over time. The use of these non-GAAP performance measures may also provide a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose. For example:

• Adjusted EPS, Adjusted Revenue, Adjusted Operating Income, Adjusted Contribution to Profit, Adjusted EBITDA and organic revenue provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance.
• Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common stock dividends and fund share repurchases and acquisitions.
• Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period.

In addition, the Company has historically provided these or similar non-GAAP performance measures and understand that some investors and financial analysts find this information helpful in analyzing the Company's operating margins, and net income and comparing the Company's financial performance to that of its peer companies and competitors. Based on interactions with investors, we also believe that the Company's non-GAAP performance measures are regarded as useful to our investors as supplemental to our U.S. GAAP financial results, and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures.

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Investors: Brian Campbell 201.748.6874 [e-mail] Media: Katie Roberts 602.373.7233 [e-mail]